Some ‘have abused the public trust by hoarding vast sums of money.’ one reformer says

California’s most affluent special districts nearly doubled their spending over the course of a decade, while the value of their cash and investments nearly tripled, according to a Southern California News Group analysis of state data.

The figures revive the question many good-government advocates have been asking for decades: Do special districts, which operate largely under the public radar, simply have too much money?

Critics say they do, and argue that their functions should be absorbed into cities and counties that overlap their boundaries.

Special districts say they don’t, insisting they simply safeguard vital infrastructure and are better left alone.

California’s 250 largest special districts had cash and investments worth $47.1 billion when the 2017 fiscal year drew to a close, up dramatically from $17.9 billion a decade earlier, according to data from the State Controller’s Office. That’s a leap of almost $30 billion, or 164 percent.

“From the perspective of California taxpayers, special districts are neither inherently good nor inherently bad,” said Jon Coupal, CEO of the conservative Howard Jarvis Taxpayers Association, in testimony to the Little Hoover Commission in 2016.

“However, few can deny that many government entities have abused the public trust by hoarding vast sums of money.”

Special districts insist he is wrong. They are the guardians of water, sewer, transportation systems and the like — and their money is earmarked to build, repair and replace vital infrastructure, they say.

Quarter-billion-dollar club

Six special districts in California have amassed more than $1 billion each in cash and investments, with transportation agencies accumulating the richest treasure chests, according to the data.

Riders board the Red Line at Union Station. The Los Angeles County Metropolitan Transportation Authority – a special district better known as Metro – is the transportation planner and coordinator, designer, builder and operator for one of the nation’s largest and most populous counties. ( Photo by David Crane, Los Angeles Daily News/SCNG)

Another 48 from all over the state — hospital, utility, water, sewer, flood control, air quality districts and the like — have cash and investments exceeding a quarter-billion dollars each.

The billion-plus players in 2017 were mainly in the business of moving Californians: the Bay Area’s Metropolitan Transportation Commission ($3.8 billion), the Los Angeles County Metropolitan Transportation Authority ($1.6 billion), the San Francisco Bay Area Rapid Transit District ($1.55 billion), the Orange County Transportation Authority ($1.48 billion), the Metropolitan Water District of Southern California ($1.37 billion), and the Santa Clara Valley Transportation Authority ($1.06 billion).

The Legislature began requiring the 250 special districts with the greatest annual revenues to have their finances called out separately shortly after the Little Hoover Commission — a good-government watchdog with no enforcement powers — spotlighted reserves that dwarfed annual spending in dozens of agencies and blasted districts for amassing tremendous piles of cash.

That blistering study, “Special Districts: Relics of the Past or Resources for the Future?” was released in 2000. It bemoaned that hospital districts that no longer run hospitals continued to exist and collect taxes. It chided Local Agency Formation Commissions — one in every county, charged with ensuring efficiency — for being unable or unwilling to make sensible mergers happen. It urged a standard definition for “reserve funds” and greater transparency in reporting them.

In 2017, the Little Hoover Commission issued an update: “Special Districts: Improving Oversight & Transparency.” It was a friendlier assessment, but bemoaned that hospital districts continued to exist and collect taxes, even when they don’t fund hospitals. And that Local Agency Formation Commissions were unable or unwilling to make sensible government mergers happen, even though that is their mission. It called for a standard definition of “reserve funds” and greater transparency in reporting them.

While some reformers throw their hands up at the snail’s pace of progress, there have been some improvements, said Pedro Nava, an attorney and chairman of the Little Hoover Commission. From 2000 to 2017, districts made big strides in how they communicate their activities and finances with the public, he said — though even today, not every district has a website.